FRC warns auditors over credit crunch

Ongoing liquidity problems mean entities with exposure to the financial markets face an increased risk of material misstatements, according to the FRC. The council has expanded its area of concern outside the financial sector to include any business that “could be affected by current market conditions”.

In a January bulletin, it flagged the “going concern” and the valuation of investments as specific risk areas. As expiring financial arrangements prove difficult or impossible to replace, the “going concern” assumption “faces serious consequences”.